FMCG volumes fall year-on-year in December quarter but improve sequentially

 

Industry value growth was recorded at 7.6%, but the pace of growth was lower year-on-year as companies reduced the intensity of value addition leading to a decline in sales

New Delhi: India's fast-growing consumer goods industry reported a year-on-year decline of 0.3% in the December quarter as rural markets reported negative volume growth for the sixth straight quarter. Volumes improved sequentially following demand in the urban markets.

NielsenIQ said on Thursday that the industry's price growth was recorded at 7.6%, but the pace of growth was lower year-on-year as companies sequentially reduced the intensity of price increases, leading to a decline in sales .

According to NielsenIQ India's FMCG snapshot for the October-December quarter, "Slower growth (9.9% to 7.9% in Q3 2022) and flat consumption growth (-0.6% to -0.3% in Q3 2022) offset this slowdown "

To be sure, the price-based increase is reflected through an increase in the average price of commodities as compared to the same period last year. The increase in average price could be due to a direct price increase, a reduction in premium, or a reduction in promos.

NielsenIQ said in a note released that the FMCG industry registered a decline in value-based growth in both urban and rural markets, but in terms of volume growth, urban maintained a steady growth of 1.6%, while rural volume grew by 2.8%. % has declined. Thursday. The market researcher said that while the overall FMCG volume growth is negative, the volumes in absolute value as well as remain above pre-Covid levels.

“Over the past year, consumer spending was primarily impacted by inflation – echoed through a shift to smaller packs by consumers and reduction in grammage by manufacturers. Consumers in rural India, in particular, have felt this pressure the most, with rural markets continuing to see negative consumption growth, said Satish Pillai, managing director, NielsenIQ.

However, it is encouraging to see a positive note in the organized sector, with modern trade growing in double digits in the last two quarters of the year, and absolute consumption levels remain higher than pre-Covid levels, he said.

Demand during the quarter was largely led by packaged foods, especially categories such as staples and impulse foods. On the other hand, non-food categories continued to decline across all categories; Such categories have registered lower volume growth in previous quarters as compared to pre-Covid levels.